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Moody's Downgrades and Places Legacy Benefits Life Insurance Settlement 2004-1 LLC Notes on Review for Possible Downgrade.

New York: Moody's has placed on review for possible downgrade the Class A Notes and has downgraded and placed on review for possible downgrade Class B Notes issued by Legacy Benefits Life Insurance Settlements 2004-1 LLC. The underlying collateral consists of a pool of universal life insurance policies and annuity contracts purchased on the lives of the insured individuals. Amounts received under the fixed payment annuity contracts are designated to cover the future premium payments on the corresponding insurance policy, as well as fees, interest and principal on the notes.

The complete rating actions are as follows:

Issuer: Legacy Benefits Life Insurance Settlement 2004-1 LLC

Cl. A, A3 (sf) Placed Under Review for Possible Downgrade; previously on Jan 15, 2014 Downgraded to A3 (sf)

Cl. B, Downgraded to Ba2 (sf) and Placed Under Review for Possible Downgrade; previously on Jan 15, 2014 Downgraded to Ba1 (sf)


The rating actions are prompted by the risk of potential insurance policy lapses and also subordination in the case of the Class B Notes. Policy lapses occur when the account value for a policy depletes completely, and there are no funds remaining to apply to the cost of insurance. The annuities may not be able to keep up with the rise in the cost of insurance of the corresponding insurance policies, thus depleting the account values. In addition, there is risk of policy lapses as the insured individuals age and approach their policies' corresponding maturity dates, if any. Moody's anticipates that some policies might be at risk of lapsing assuming a continued rising cost of insurance and the potential for continued decreased mortality.

During the review period, Moody's will refine its analysis of potential policy lapses, and will evaluate the potential impact to credit enhancement for the Class A and Class B Notes that would result from such lapses.

The principal methodology used in these ratings was "Moody's Approach to Monitoring Life Insurance ABS" published in January 2015. Please see the Ratings Methodologies page on for a copy of this methodology.

Factors that would lead to an upgrade or downgrade of the rating:

Change in mortality or lapse risk.


For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions of the disclosure form.

Moody's did not use any models, or loss or cash flow analysis, in its analysis.

Moody's did not use any stress scenario simulations in its analysis.

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Publication:Daily the Pak Banker (Lahore, Pakistan)
Date:Mar 11, 2016
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